County will cut another 20 employees

Armed with his budget axe, county Finance Director Pete Provenzano on Thursday appeared before officials with one simple message: Keep on choppin’.

Provenzano told the Board of Commissioners that the local economy has improved and the “structural budget” shortfalls of the past are fading, but state laws and policies will keep Macomb County underfunded for more than a decade.

The Hackel administration’s new budget for 2014, Provenzano explained, will eliminate 20 positions through attrition at a savings of $529,000. While programs will not be cut, the finance chief said that the shortfall in property tax revenues, which began with the 2008 housing market collapse, means that the county must continue cutting spending by reducing the workforce.

“The county has cut 450 positions since 2006,” he said. “When you consider the average cost per employee, $75,000 including fringes and all expenses, that’s $34 million we were able to eliminate from our budget just through attrition and department reorganization.”

No tax increases and no money from the “rainy day” fund are needed to balance next year’s spending plan.

The new budget offers some good news, such as a $2.5 million savings in employee health care costs due to the caps put into place by Gov. Rick Snyder for local governments. Improvements in the state foster care system will reduce the cost of juvenile detentions by about $1 million.

For the first time in several years, state revenue sharing will increase, by $576,000, and liquor tax revenues are anticipated to jump by $350,000.

The Board of Commissioners will clearly make some additions and subtractions to the proposed budget but they are limited by several pressing fiscal matters. While Provenzano and County Executive Mark Hackel last week praised the new mark reached for 2014 -- the end of multi-million dollar structural deficits -- other multi-million dollar issues have arisen.

The end of payless furlough days for employees next year will cost $3 million, pension obligations will rise by $2 million, state changes to the business tax on machinery and equipment will deplete $750,000 in revenues.

“We need to keep doing what we’ve been doing, hold the line on spending,” Provenzano told the commissioners. “We … can see the light at the end of the tunnel but we can’t go back to where we were.”

Those two issues present worrisome long-term budget problems for the county. Because state law limits annual increases in tax assessments to the rate of inflation, even a best-case scenario projects that Macomb’s 2008 level of property tax revenues will not return until 2025.

The 8 percent increase forecast for retiree health care in 2014 could become the norm. At the same time, the county’s long-range liabilities for retirees’ coverage are estimated at a stunning $500 million. Provenzano said that gap must be closed, not ignored. He proposed $3 million annual allocations from the general fund financed by reduced benefits, an end to medical coverage for retirees’ spouses among new hires, and a defined contribution plan that forces retirees to pay a portion of the costs.